UGA economists peer into crystal ball and see slowing Georgia economy in 2025

Caption

From left, economists John Silvia and Ben Ayers speak at the University of Georgia’s 2025 Economic Outlook kickoff event.

Credit: Ross Williams/Georgia Recorder

Georgia’s economic growth could slow down in the new year, University of Georgia economists predict, but Georgia could fare better than the nation as a whole, even as questions loom about the financial policies of President-elect Donald Trump.

The state’s economy is projected to expand by 2.4% next year, down from 3.1% this year, said Terry College of Business Dean Ben Ayers at a 2025 Georgia Economic Outlook presentation in Atlanta Friday. Nationwide, Ayers expects the growth rate to slow from 2.5% on average to 1.6%

“On the positive side, we’re expecting again the state of Georgia to outperform the nation,” he said, speaking to a crowd of business leaders at the Georgia Aquarium in Atlanta. “And the slowdown that we’re expecting will be smaller here in the state of Georgia.”

Ayers said the major driver of the slowdown is the Federal Reserve’s 2022 efforts to constrain lending to control inflation. Inflation has dropped from 8% to 3% since then, and the rate is expected to stay at 3% in 2025. The inflation rate at the start of 2020 was 2.3%, according to the Bureau of Labor Statistics.

The risk of a recession beginning in 2025 is about one in four, Ayers predicts, which is higher than the baseline of one in six, but an improvement over this year’s odds, which were one in three. Potential risk factors for a recession include an energy price shock, stock market crash or expansion of conflicts in Ukraine and the Middle East.

Georgia’s unemployment rate is expected to average 4% next year, higher than this year’s 3.7%, but still better than the expected national average of 4.3%.

New jobs are also expected to shrink, from about 1.5% growth to about 1%, again better than the expected national rate of .6%.

If you’re looking for work in health care or home building, 2025 could be the year of your big break.

A growing and aging population is expected to bolster health care hiring around the state, while lower mortgage rates, favorable demographic trends and a lingering housing shortage should mean plenty of jobs for home builders.

The number of single family homes in Georgia is set to go up by 9%, but if you’ve been waiting to buy a home, you may have to keep waiting – home prices, which have increased by 65% since the pandemic, according to UGA, are expected to hold steady.

Those who work in retail or in information may be at greater risk as competition from online retailers and technological advances squeeze those sectors.

The Trump Factor

On the campaign trail, Trump pledged to support policies that could reshape the economy in a big league way, including tariffs on imported goods that economists warn could make the stuff Americans buy more expensive.

Economist John Silva did not call out Trump by name, but said that if those proposed tariffs become reality, Americans could pay more for products that are not naturally found in the U.S., including auto parts, clothing and types of lumber used for building homes.

“What do tariffs do? They basically raise the price,” said Silvia, Florida-based CEO and founder of Dynamic Economic Strategy. “In the short run, your inflation numbers accelerate because you calculate year over year, but in the long run, prices stay higher than what they were originally. This presents a problem.”

“We don’t produce bananas in Georgia, OK?” he added. “And except for Hawaii, we don’t produce coffee in the United States. So you’re going to put a tariff on all these goods, and then someone walks into the grocery store and it says ‘Honduran bananas, plus 15 cents for your tariff.’ How’s that going to work?”

Trump also pledged to deport millions of immigrants living in the country illegally. What his actual immigration policy looks like could spell weal or woe for industries like agriculture and construction, Silvia said.

“We’re not gonna get the job done if you’re gonna tell me all these immigrants have to leave,” he said. “It’s not gonna happen, and it’s not gonna happen in Texas, it’s not gonna happen in California. So what are we going to get in terms of an immigration policy? It has to be somehow defined over the next six months to a year, and that policy’s going to define our agricultural output and our manufacturing and construction output over the next two to five years.”

This story comes to GPB through a reporting partnership with Georgia Recorder.